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European investors have scaled back their European equities weightings despite increasing optimism about the region's growth prospects, according to the latest survey of fund managers by Bank of America Merrill Lynch.

The survey released yesterday showed that fund managers reduced their overweight positions in European equities. Overweight positions indicate that investors have allocated a higher percentage of their portfolio to an asset class compared to the strategy benchmark.

In the February poll, fund managers were found to be 8% overweight in European equities, down from 15% the previous month. Bank of America Merrill Lynch said this showed that “investor optimism on growth isn’t matched by positioning or conviction”. This is just below the 10-year average of 10% overweight. In the meantime, they put more money into US equities.

The reduction in European equities weightings came despite investors’ confidence in the region’s economic growth and outlook reaching its highest level in two years.

The survey showed that eurozone growth expectations increased in February, with 34% of respondents seeing the EU economy improving in 2013 – the highest level since 2011. However, 12% still expect a recession in Europe this year.

The survey, which covered 251 fund managers with a combined $691bn in assets under management, said investors would need to see proof of earnings before committing more funds to European equities.

Nearly half of fund managers said they believe corporate earnings estimates for Europe are too high, and 54% believed there was no chance of double-digit earnings per share growth in 2013.

Analysts wrote: “...for the current pick up in optimism to translate to an increased [overweight position] in EU stocks and another leg up in markets, [portfolio managers] will want evidence that earnings growth is coming through and that firms are beginning to deploy their cash.”

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Investors echoed their January sentiment that France poses the largest tail risk for Europe in 2013, followed by Spain.

Meanwhile, at a macro level, concerns about the US fiscal crisis receded, although fears about a European sovereign crisis increased slightly.

Nearly 60% of investors surveyed globally at the beginning of February said they believed the world economy would grow stronger in 2013.

John Bilton, European investment strategist at Bank of America Merrill Lynch, said: “Investors are striking a balance between the optimism over growth and caution over investment decisions. Investors have so far resisted taking an exuberant stance.”

Bank of America Merrill Lynch surveyed investors between February 1 and February 7.